Global Traffic Falls 2.4 Percent in April

May 27, 2010

Geneva - The International Air Transport Association (IATA) announced international scheduled air traffic results for April 2010. Passenger demand slumped by 2.4% as a result of massive flight cancellations centered in Europe during the six days in April following the eruptions of an Icelandic volcano. The fall in traffic interrupted the industry’s recovery from the global financial crisis.
International scheduled cargo traffic, less impacted by the cancellations, saw the pace of its recovery slow to 25.2% growth in April (down from the 28.1% improvement recorded in March).

“The ash crisis knocked back the global recovery - impacting carriers in all regions. Last month, we were within 1% of pre-crisis traffic levels in 2008. In April, that was pushed back to 7%,” said Giovanni Bisignani, IATA’s Director General and CEO.

“European carriers bore the worst of the volcano’s impact. Their 11.7% drop in passenger traffic could not have come at a worse time. Europe’s slow recovery from the global financial crisis and its currency crisis are already a huge burden on the profitability of its airlines. The uncoordinated and excessive cancellations and unfairly onerous passenger care requirements rubbed salt into the European industry’s wounds,” said Bisignani.

The April drop in demand in Europe can be attributed to both the flight cancellations (two-thirds of the total decline) and follow-on cancellations due to uncertainty of the availability of air travel (one-third). Early indications for May show a rebound in travel from the disrupted levels in April.

Looking ahead, Bisignani challenged Europe to reform its air traffic management. “The ash crisis was an embarrassing wake-up call for European governments. We need leadership to deliver the Single European Sky, fair passenger rights legislation and continent-wide coordination,” said Bisignani.

The scale of the ash crisis saw global load factors drop to 76.9% from the 78.0% recorded in March. Freight load factors also dipped to 55.3% from the 57.1% recorded in the previous month. While March traffic was within 1% of pre-crisis levels for both passenger and cargo, this slipped to 7% for passenger and 3% for cargo in April.

International Passenger Demand
The ash crisis accentuated the asymmetrical nature of the economic rebound.

• European carriers posted an 11.7% demand drop in April (compared to a 6.2% increase in March). Uncertainty of service reliability in the aftermath of the ash cancellations and major unrest in Greece as a result of the currency crisis added to the weaker European demand during the month. Limited GDP growth expectations of 0.9% continue to dampen demand across the continent.

• North American carriers posted a 1.9% decline in demand, primarily as a result of the impact of the ash crisis on North Atlantic routes. This is a major step backwards from the 7.8% growth recorded in March. This fall in demand was less than half the 4.5% cut in capacity, pushing load factors to 80.2%.

• Middle Eastern airlines recorded the strongest traffic growth at 13.0%, which is about half the 25.9% increase of the previous month.

• African carriers also saw their recovery slow to 8.6% growth in April, down from the 16.9% growth recorded during the previous month.

• Latin American carriers posted a 1.2% increase for the month, a quarter of the 4.6% growth recorded in March, which was already a weak month as a result of the Chilean earthquake.
International Cargo Demand

Air freight was also impacted by the ash crisis, although less dramatically than passenger traffic. The global purchasing managers’ index rose to its second highest level ever in April, indicating that the fundamentals of the air freight business were not impacted by the crisis. We are, however, nearing the end of the inventory cycle and would expect freight growth to slow down over the rest of the year.

• European carriers showed the weakest growth at 8.3%, down from the 11.5% growth recorded in March. Poor economic performance prior to the ash crisis had seen European airlines lagging behind the rebound experienced by other regions.

• North American carriers recorded a 23.8% increase. While impressive, this was still below the 29.0% recorded in March.

• Asia-Pacific carriers, which make up 46% of international cargo operations, recorded growth of 33.2%, slightly below the 35.4% recorded during March.

• Middle Eastern carriers saw their growth rate slow to 25.9% from the 35.5% recorded in March.

• Latin American carriers saw the largest increase in cargo demand for the second straight month with a 63.0% increase - an improvement on the 47.9% recorded in March.

• African carriers also showed an improvement, from 51.4% in March to 54.6% in April.

“The ash crisis was a shock. While there is always a danger of the consequences of renewed volcanic eruptions, the impact on passenger confidence should be limited. Unfortunately, we are trading ash for two additional uncertainties - strikes and a growing currency crisis - both of which are also focused on Europe,” said Bisignani.

“The labor unrest plaguing Europe this year is unbelievable. It’s a tough competitive world. Airlines need to reduce costs to be competitive. Labor must realize that their pay checks are supported by the performance of the company. The middle of a very fragile recovery is not the time to be asking for salary increases or improved conditions. This mentality is divorced from reality,” said Bisignani.